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Title: The challenges of regulating financial conglomerates : the EU Directive and its applicability to Malta
Authors: Zahra, Rachel (2004)
Keywords: Financial institutions -- Law and legislation -- European Union countries
Financial institutions -- Law and legislation -- Malta
Holding companies -- European Union countries
Holding companies -- Malta
Issue Date: 2004
Citation: Zahra, R. (2004). The challenges of regulating financial conglomerates: the EU Directive and its applicability to Malta (Master's dissertation).
Abstract: Technological innovation, the liberalisation of national financial markets, and mounting cost reduction pressures have encouraged the development of groups of regulated entities offering a comprehensive range of hybrid financial services including banking, securities and insurance services. These groups, or 'financial conglomerates' as they are more commonly known, often have complex management and corporate structures which are often organised along global business lines rather than legal structure, engage in intra-group transactions, and which manage some or all of their major risks across the various entities within the group, in a manner that cuts across legal entity lines. The rapid evolution of such diversified financial conglomerates on a global basis presents significant challenges to both the management of these firms and the supervisors with responsibility for regulating them. The broad span of activities and locations alone create the need to understand the relationships among the legal entities within the structure and the potential for adverse developments in one part of the conglomerate to affect the operation of other parts. This dissertation seeks to study the challenges facing supervisors in their search for measures with which to adequately monitor the complex web of activities of financial conglomerates. It does this through an in-depth analysis of the salient provisions of the EU Financial Conglomerates Directive. This dissertation also explores the Maltese aspect, by taking a closer look at groups in Malta that operate across sectors, and suggesting amendments to Maltese legislation in order to bring into force the provisions of the Directive. Chapter One touches on the main market trends and developments which have led to the emergence of financial conglomerates and their growth in importance to the financial stability of national and international economies. Chapter Two reviews the international regulatory response to financial conglomerates, by taking a close look at what action the UK, US and Netherlands financial regulators have taken in order to address this development. The EU Directive on the supplementary supervision of financial conglomerates is overviewed in Chapter Three, which provides details on the salient provisions of the Directive. Chapter Four continues to delve deeper into the requirements of the Directive by exploring the technical aspects, these primarily being intra-group transactions and exposures, risk concentrations and risk management, capital adequacy, and internal controls and corporate governance. Chapter Five looks at the difficulties that regulators may face in carrying out cross-sectoral supervision, whilst also taking a closer look at the changes which the Financial Conglomerates Directive makes to the sectoral Directives in order to close certain loopholes. The impact of the Directive on the Maltese financial sector is explored in detail in Chapter Six, which first looks at the structure of each of the main financial services groups operating in Malta in order to establish their cross-sectoral activities, and then analyses the impact on the Maltese consumer and regulator, as well as makes recommendations for the implementation of the Directive into Maltese legislation. The seventh and final chapter contains a short critique of the Directive as well as an outlook onto future Maltese and international developments.
Description: M.A.FIN.SERVICES
Appears in Collections:Dissertations - FacLaw - 1958-2009
Dissertations - FacLawCom - 1997-2008

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